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May 3, 2006

World oil prices to stay high through 2007: US EIA

by Sam Savage

WASHINGTON (Reuters) - World crude oil prices are expected
to stay high through 2007 because of strong petroleum demand,
limited surplus oil production and refining capacity and
concerns about supply disruptions due to geopolitical risks in
countries like Iran, the U.S. Energy Information Administration
said Wednesday.

The EIA said none of these "forces that contribute to
current high crude oil prices will ease significantly in the
near future, so our best forecast is that crude oil prices will
remain elevated through 2007."

The Energy Department's analytical arm also said in its
weekly review of the oil market, "Strong growth in the world
economy, and particularly in China and the United States, has
fueled the need for more oil, thus putting upward pressure on
prices."

U.S. oil prices have stayed above $70 a barrel also due to
fear among traders that the West's dispute with Iran over its
restarted nuclear program could disrupt that country's oil
exports and a large part of Nigeria's oil exports remains
halted because of militant violence.

"The situation in Nigeria may continue for many months
(and) market concerns about a possible supply disruption from
Iran are likely to remain through at least this year if not
into next year," the EIA said.